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Unemployment: A Sign of "Uncertainty" or the Need for a New Set of Assumptions?

As America’s countdown towards default continues, we keep hearing that it’s “uncertainty” about the economy that is keeping companies with big bank on hand from hiring new employees.

That seems reasonable on its face. After all, the news reports say we’re headed towards financial Armageddon … and honestly they have for some time. Sure, the “countdown towards default” is an especially noticeable cliff we’re running towards, but America has never really addressed the economic fault lines that nearly cracked apart in 2008, and the European Union is teetering from one crisis to another …

“Uncertainty” seems about right.

But as Andrew Leonard of Salon.com points out, the idea that companies aren’t hiring because of uncertainty about the economic future doesn’t actually account for all the facts. Business hiring is weak … but business spending on equipment and facilities and buildings is “robust.”

So companies are willing to spend, and spend big, during this time of uncertainty: they’re just not willing to spend on people.

If there’s a better epigram for the 21st century economy so far, I can’t think of what it is.

If businesses aren’t hiring because of reasons that have nothing to do with uncertainty … if this is a symptom of larger economic trends towards efficiency and automation and the decline of a consumption economy … then we have a new reality to adjust to.

I’ll admit I’m not entirely sure what the new big picture is, but as the Arab Spring has demonstrated once again, a population won’t sit quietly and let its potential waste away just because they’re told to. If the new big picture has fewer jobs in it, there are some things … at a minimum … we’re going to have to address.

1. “On the job training” won’t be so common. People looking for work will either need to be given access to a higher level of training and skill development, or they’ll need to be given better opportunities for entrepreneurship. Without these opportunities, as a recent New York Times article suggests, we’ll quickly develop an underclass of people without the skill sets companies actually are looking for.

2. People out of work don’t have to be “idle hands.” The old paradigm is that if you don’t have a job the best use of your time is looking for one. But if there simply aren’t jobs to be had, that’s no longer true. The stigma of joblessness must be lifted, it must be acknowledged that good people really can be unemployed, and we need to think creatively about productive ways that capable people who have time can spend it. There’s a lot that needs doing in our society, and a lot that isn’t getting done because there’s an assumption that the private sector will take care of it. Well, if the private sector isn’t investing in people, maybe the rest of us should.

3. A bigger social safety net. It’s terrifying to me that we’re talking about cutting up our social safety net at a time when we need to encourage more people to be entrepreneurs. Entrepreneurship requires a level of risk that few people will be willing to take at a time when failure means catastrophe. But if we have universal health care, then more people will be willing to take the kind of risks that generate jobs. If we have easier access to decent housing, then more people who are unemployed will look for meaningful ways to spend their time, instead of cramming in a old-paradigm job search. Traditionally people have opposed the social safety net because they thought it would discourage work. In the 20th century, that may have been true. In the 21st century, it’s just the opposite: a social safety net will encourage entrepreneurship far more than the fear of losing everything.

The bottom line is that the 20th centuries assumptions about how much the private sector could and would live up to its side of the social contract assumed that mass employment was a key criteria of business success. If that’s no longer the case, then a health society will require businesses that don’t hire to otherwise pay their way and the rest of us to pick up the slack.